Bitcoin Price Falls to $101K: Fed’s Hawkish Stance Impact

 Bitcoin Price Retreats Amid Hawkish Fed Outlook and Powell’s Comments

Bitcoin fell deeper on Thursday, retreating from its recent peak, with the hawkish outlook at the U.S. Federal Reserve raising concerns over tighter monetary conditions. This development dragged down risk assets, with cryptocurrencies being no exception as investor appetite for speculative investments dwindled.

The Federal Reserve cut the interest rate by 25 basis points but indicated further cuts at a slower speed. The policymakers showed the support for only two reductions in 2025 by halving the previous expectations that were four. This may indicate a longer period during which borrowing costs are high.

The hawkish tone dampened Bitcoin’s momentum as the tighter monetary conditions reduces the liquidity of such speculative assets like cryptocurrencies. Broader risk-driven markets also had a negative reaction, while steep declines were logged on Wall Street on Wednesday.

Bitcoin’s Price Movement

As of 01:08 ET (06:09 GMT), Bitcoin slid 2.6 percent to $101,153.0, temporarily dropping under the $100,000 threshold during the day.

The decline was from its all-time high of $108,244.9 recorded on Tuesday following comments from President-elect Donald Trump that a Strategic Bitcoin Reserve was a possibility and sparked positive sentiment.

Fed Chair Jerome Powell further damped sentiment when he clarified the central bank’s position on Bitcoin. He said the Federal Reserve has no plan to stockpile large quantities of the cryptocurrency, underlining that such decisions are beyond the authority of Congress.

The comments were by Powell amid discussions about the potential Strategic Bitcoin Reserve propounded by Trump. As of now, the idea remains vague, and details on how it will work are not available. This gives rise to regulatory uncertainties in the feasibility of the reserve.

El Salvador’s President Nayib Bukele scaled back his plan to make Bitcoin a national currency in another development. He did this as part of a deal to secure a $1.4 billion loan from the International Monetary Fund (IMF).

Bukele’s move marks a significant pivot from his earlier Bitcoin ambitions. Since adopting the cryptocurrency as legal tender in 2021, El Salvador had outlined plans for Bitcoin-backed bonds and other initiatives. However, the country’s Bitcoin stockpile has seen a substantial valuation increase following the crypto’s recent rally. 

 Altcoin Market Follows Bitcoin’s Decline

Bitcoin’s pullback sent shockwaves throughout the wider cryptocurrency market, with most altcoins in the red. Traders remained cautious after the Fed meeting, and all the gains made during the previous week were erased.

ETH: Dropped 4.7% to $3,684.62.

XRP: Declined 5.6% to $2.3701.

SOL: Fell 2.5%.

MATIC: Slumped 6%.

ADA: Lost over 4%.

DOGE: Dropped 5.6%.

The bearish sentiment pointed to the vulnerability of altcoins to broader market trends and regulatory concerns.

Hong Kong’s Regulatory Push

During the global turmoil of the cryptocurrency market, Hong Kong took steps to position itself as a digital asset trading hub. The city’s securities regulator approved four cryptocurrency exchanges as it sought to stay ahead in the global competition for cryptocurrency adoption.

1. Bitcoin Price Decline: Dropped 2.6% to $101,153.0, briefly falling below $100,000, after the Fed’s hawkish stance.
2. Fed Policy Effect: A slower pace of rate cuts and protracted elevated borrowing costs weigh on speculative assets like cryptocurrencies.
3. Powell’s Comments: Clarified that the Federal Reserve has no plans to stockpile Bitcoin, adding to market uncertainty.
4. El Salvador’s Change of Heart: El Salvador’s President Bukele has toned down the Bitcoin plans to secure a $1.4 billion loan from the IMF. 5. Altcoin Rout: The major altcoins, including Ether, XRP, and Dogecoin, also suffered heavy losses. 6. Hong Kong’s Play: Approved four cryptocurrency exchanges to fortify its position as a digital asset hub.

The trajectory of the cryptocurrency market remains shaped by Fed policy direction, regulatory uncertainty, and the shifting narratives of the world. It is resilient with Bitcoin while the broader ecosystem of the crypto faces a heightened volatility challenge.